Inventory Optimisation

Definition

Inventory optimisation is the process of strategically managing inventory levels to achieve a balance between meeting customer demand and minimizing inventory-related costs. This involves analysing historical sales data, demand forecasting, and supply chain management to determine the optimal inventory levels that will ensure product availability while reducing carrying costs, stockouts, and excess stock.

— sennder Team

FAQ

What factors should be considered for inventory optimisation?

Factors to consider for inventory optimisation include customer demand patterns, lead times, order quantities, safety stock levels, and carrying costs. Additionally, consider seasonality, product life cycles, and supplier reliability.

How can inventory optimisation benefit a business?

Inventory optimisation can lead to reduced carrying costs, improved cash flow, increased customer satisfaction due to fewer stockouts, and more efficient use of warehouse space.

What are some inventory optimisation techniques?

Common techniques include ABC analysis, Economic Order Quantity (EOQ), Safety stock calculation, Demand forecasting, and Reorder point calculation.

How does technology aid in inventory optimisation?

Technology improves inventory optimisation by providing real-time inventory levels visibility, automating ordering, facilitating better demand forecasting with systems like WMS, ERP, and advanced analytics tools.

Example or usage in road freight logistics

In road freight logistics, inventory optimisation is critical for ensuring that goods are available when needed, while also minimizing carrying costs and warehouse space requirements. Logistics providers use inventory optimisation techniques to analyze data from multiple warehouses, distribution centers, and transportation modes to determine the optimal inventory levels for each location. By implementing advanced inventory optimisation systems and technologies, logistics companies can reduce costs, improve customer satisfaction, and enhance overall operational efficiency.